For a long time now, a few major players have dominated Canada’s grocery landscape. This has often left suppliers and, by extension, consumers feeling the pinch. A significant shift is underway: the new Grocery Code of Conduct. Designed to foster a fairer, more transparent food supply chain, this code promises more than just industry harmony. Ultimately, it aims to bring tangible benefits right to your grocery cart.
Why is a code needed?
Just five large retailers control over 80% of Canada’s grocery market. This has created a power imbalance in the industry. The entire food industry, from grocers to restaurants, works with extremely low margins. These tight margins make the power imbalance a high-stakes issue for all involved.
In an interview with Now magazine, professor and director of the Agri-food Analytics Lab at Dalhousie University, Dr. Sylvain Charlebois, said, “One move from a grocer can kill manufacturers”. Some say that these issues have limited consumer choice and unnecessarily increased prices. Others say that the current landscape has deterred food processors from investing in Canada. This puts the country’s access to domestically grown and processed food at risk and creates reliance on imported products.
What the Code aims to do
The Grocery Code of Conduct is a set of rules that Canada’s food industry stakeholders agree to uphold. These stakeholders are primarily retailers and suppliers. The Code promotes predictability, transparency, and fair dealing as ingredients and products make their way from suppliers to stores to Canadians’ homes. The code’s core objectives are to:
- Contribute to a thriving and competitive grocery industry, recognizing the needs of all stakeholders in the value chain, including small and medium enterprises.
- Promote reciprocal trust and collaboration among grocery value chain partners, based on clear standards for fair dealing.
- Allow all parties governed by the Code to make informed business decisions in a context of commercial certainty, governed by clear agreements.
- Provide for an effective, equitable mechanism for resolving commercial disputes.
This means addressing issues like unclear fees, payment delays, and unilateral contract changes, promoting clear agreements and good faith negotiations. The code includes detailed provisions for fair and ethical dealing, commercial agreements, payments, and dispute resolution processes.
Direct benefits to Canadians
While the code primarily focuses on retailer-supplier relationships, its ripple effects are intended to directly benefit the consumer:
Increased choice and product innovation
The current grocery landscape is not conducive to innovation, one of the greatest benefits a capitalist market offers consumers. When a company can’t trust that their basic operational costs will be covered because of an environment fraught with unreliable agreements, they aren’t going to be willing to take risks. One of those risks that gets left behind is research and development, which means less innovation and fewer choices.
Enhanced domestic food security
The Code is an investment in Canada’s domestic agricultural and processing sectors. Fostering a more balanced and thriving agri-food industry helps ensure a resilient food supply for the future, strengthening Canada’s ability to have secure access to domestically grown and processed food and reducing reliance on imports. With Food Banks Canada Hunger Count reporting a 90% increase in food bank visits compared to 2019, food security is more important now than ever before.
Improved competition
Charlebois calls The Code the “singular most significant mechanism we can provide to the industry to increase competition and help consumers.” It will do this by levelling the playing field for suppliers and smaller, independent retailers. This is important for two reasons. The first is that smaller grocers are sometimes the sole food providers in rural or remote communities. These areas need reliable access to food. The second, by giving these businesses a stronger foothold in the industry, competition inevitably rises. Increased competition generally leads to benefits for consumers, including potentially better prices and service.
Will the Grocery Code of Conduct lower your grocery bill?
This is where opinions diverge among experts and industry leaders:
Optimistic view
Gary Sands, senior vice president of the Canadian Federation of Independent Grocers, predicts a “positive impact” on prices. He points to experiences in countries like Ireland, where food prices decreased significantly after similar mandatory codes were adopted. Food prices in Ireland decreased by more than 12% between 2013-2020, in contrast to a 4.4% increase in Canada during the same period. Experts attribute the decrease to the Code. They say it lowered administrative costs, waste, and unnecessary fees. All of which made the supply system more efficient and reduced costs that would otherwise be passed to consumers.
Cautious view
Karen Proud, the newly appointed President and Adjudicator of the Office of the Grocery Sector Code of Conduct (OGSCC), states that the Code “was never meant to deal with” food inflation directly, as many other factors contribute to food prices. Her view is that the Code’s role is to create a “better, more collaborative, more trust-based industry”.
Skeptical view
Food economist Mike Von Massow suggests that the fact that the Code puts limits on the concessions that large grocers can demand from suppliers could potentially drive prices up. He says that it’s difficult to see how taking money away from grocers would lead to lower prices.
Despite differing views on direct price reduction, the underlying aim is to create a more efficient and fair system, which could indirectly lead to cost benefits by reducing inefficiencies and administrative waste in the supply chain.
Implementation and what’s next
- The Code, finalized last year, came into force in June 2025. It is expected to be fully operational by January 2026.
- The Office of the Grocery Sector Code of Conduct (OGSCC) has been formed to oversee its implementation and enforcement. Proud, as its inaugural President and Adjudicator, is responsible for overseeing the rollout, educating industry players, and eventually enforcing the code.
- Last year, all major Canadian grocers—Loblaw, Walmart, Costco, Metro, and Sobeys owner Empire—agreed to sign on to the Code. Since then, Empire and Lactalis Canada have already become the first official retail and supplier members, respectively.
- Governance documents, including bylaws, operating rules, and a formal dispute resolution mechanism, are in the process of being written and expected to be completed by the end of September.
It’s worth noting that while participation is currently voluntary, the experiences of countries like the UK suggest that mandatory codes tend to be more effective. That being the case, it wouldn’t come as a surprise that, at some point in the not-so-distant future, our Canadian code also becomes mandatory.
Wrap-up
The Grocery Code of Conduct is a big moment in Canada’s food industry’s history. It’s a demonstration of the industry’s commitment to fairness, transparency, and collaboration. By creating a healthier, more competitive environment for suppliers and retailers, Canadian consumers can enjoy greater choice, food security, and potentially more affordable food prices.
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